Of the estimated 50,000 Uber drivers operating in California, thirty of them have started a class–action lawsuit against the company. The complaint claims that Uber has been misclassifying all of its California drivers as independent contractors rather than employees ever since the Dynamex case was decided.
Dynamex, of course, is the California Supreme Court decision, published on April 30, 2018, that proclaimed that the “ABC Test” is the proper test for determining whether someone is an independent contractor or an employee. The decision was a significant departure from previous case law on worker classification. Notably, the ABC Test presumes that someone is an employee unless the hiring entity can demonstrate all three parts of the ABC Test. In this way, Dynamex almost completely shifted the burden of proof in misclassification cases from workers to hiring entities.
Nevertheless, Uber has asserted since Dynamex that it can and will continue to treat all of its California drivers as independent contractors. Accordingly, in this new lawsuit, it will be Uber’s burden to prove all of the following:
- that its drivers are “free from the control and direction” of Uber in their performance of work;
- that its drivers are performing work that is “outside the usual course” of Uber’s business; and
- that its drivers are “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed” for Uber.
For the first part of the test, expect Uber to argue that the fact that its drivers can decide their own hours easily satisfies the first part of the test. However, plaintiffs are likely to counter that the level of control exercised by Uber over things like terms of service, rates, and payment is still considerable – and non-negotiable for drivers.
The second part of the ABC Test will be especially difficult for Uber to establish. It will require Uber to show that the work performed by Uber drivers – namely, transporting people from place to place, is not, in fact, what Uber’s business consists of.
Uber, for its part, has already begun reframing how it describes its business. While it appears to still acknowledge that is part of the “ride–sharing industry,” it has reportedly stated that drivers aren’t “core” to its business. Instead, Uber’s chief legal officer has stated that Uber’s business is “a technology platform for several different types of digital marketplaces.” Uber has also started referring to itself as a “mobile application platform” in its legal filings. (See Uber’s recently filed complaint against the State of California alleging that California Assembly Bill 5, codifying Dynamex, is unconstitutional).
On the other hand, Uber will have a hard time proving it has a viable business model without including drivers in the equation. Drivers are vital to providing the services that result in the collection of revenue for its business. It may be true that no single driver is essential to Uber, but, until its self-driving vehicles are in service, the company simply couldn’t remain in business without drivers.
For the third part of the ABC Test, Uber will likely argue that this test is satisfied since none of its drivers is obliged to drive for Uber exclusively. But that is not the same thing as proving that each of its drivers is, in fact, “customarily engaged” in driving as an “independently established trade, occupation, or business.” Indeed, Uber touts that drivers can work for Uber as a side gig to supplement income from other employment or businesses they may have.
Consider also the chronology of events. How many Uber drivers had independently established ride-sharing services before Uber launched? How many would continue to provide such services if Uber folded? If the answer is not “all of them,” then all of Uber’s drivers are not engaged in an independently established business and they cannot all be classified as independent contractors.